July 12 2024: Oil prices saw a slight increase on Friday amid signs of easing inflation in the United States, the world’s largest oil consumer. However, Brent crude was still set for a weekly decline.
By 0630 GMT, Brent crude futures rose 49 cents, or 0.6%, to $85.89 a barrel. U.S. West Texas Intermediate (WTI) crude futures climbed 58 cents, or 0.7%, to $83.20 a barrel.
Both contracts had gained in the prior two sessions but remained poised for weekly declines.
Brent futures were set to fall about 1% week-on-week following four consecutive weekly gains. WTI futures were broadly stable on a weekly basis.
Investor confidence was bolstered by data released on Thursday showing U.S. consumer prices fell in June, stoking hopes that the Federal Reserve will cut interest rates soon. Lower rates are expected to boost economic growth, which would help raise fuel consumption.
However, the market is still awaiting clearer signs of action. While Fed Chair Jerome Powell acknowledged the recent trend of improving price pressures, he told lawmakers that more data was needed to strengthen the case for rate cuts.
“Cooling U.S. inflation numbers may support the case for the Fed to kick-start its policy easing process earlier rather than later, but it also adds to the series of downside surprises in U.S. economic data, which points to a clear weakening of the U.S. economy,” said Yeap Jun Rong, market strategist at IG.
Indications of strong summer fuel demand in the U.S. also supported prices. U.S. gasoline demand was at 9.4 million barrels per day (bpd) in the week ended July 5, the highest for the week including the Independence Day holiday since 2019, according to government data released on Wednesday. Jet fuel demand on a four-week average basis was at its strongest since January 2020.
“The market will remain rangebound, paralysed by opposing forces of expected demand recovery fueled by an anticipation of a strong summer for fuels consumption … but sentiment remains pegged by ongoing economic weakness and uncertain demand recovery,” said Emril Jamil, senior oil analyst at LSEG.
The strong fuel demand encouraged U.S. refiners to ramp up activity and draw from crude oil stockpiles. U.S. Gulf Coast refiners’ net input of crude rose last week to more than 9.4 million bpd for the first time since January 2019, according to government data.
